Original post: microsoft/vscode#175586
I also ran into a similar issue where, when I scroll on my terminal window, it doesn't scroll the entire output, but scrolls through my command history, its very annoying. I found the above post #175586, it ended unsolved.
Here is my fix, and it was related to setting I had done earlier but forgotten about:
terminal.integrated.scrollback
and setting it to 0, thinking that this would set my output buffer to be unlimited, but it really sets my scrollback buffer/window size to 0.- FIX: Set
terminal.integrated.scrollback
to some large number and re-open the terminal, instead of 0.